A lease where the intent is temporary use of the property by the lessee with continued ownership of the property by the lessor is called
A) off-balance sheet financing.
B) an operating lease.
C) a capital lease.
D) a purchase of property.

Question

Quizplus · Accepted Answer

An operating lease is a type of lease agreement wherein the lessee only intends to use the property temporarily, and ownership remains with the lessor. This is commonly used for assets that have a short lifespan and require regular updating or replacement, such as technology or equipment. Operating leases are considered off-balance sheet financing, as the leased asset is not recorded as an asset or liability on the lessee's balance sheet. A capital lease, on the other hand, is a lease where the lessee essentially takes ownership of the asset and records it as an asset and liability on their balance sheet. A purchase of property involves the transfer of ownership from the previous owner to the purchaser. An operating lease is a lease agreement where the lessee uses the property for a temporary period of time, typically less than the useful life of the property, and the lessor retains ownership of the property. It is not considered a purchase of property or a capital lease, and it is not a form of off-balance sheet financing as the leased property is still included in the lessor's balance sheet.

A Lease Where the Intent Is Temporary Use of the Property